Foodies Get Intimate

Diners squeeze into Upstate, a new oyster bar at 95 First Ave. Many new restaurants are taking less space.
Daniella Zalcman for The Wall Street Journal

By

Laura Kusisto

August 9, 2011

When
Shane Covey
set out to open a restaurant using only his checking account and a couple of credit cards, he quickly discovered that the places he could afford were no bigger than studio apartments.

He had worked at an oyster bar that shut down, Shaffer City, and wanted to play things cautiously. "I have no partners, no financing, no small-business loans," he said. His total renovation budget was $100,000.

He looked for more than a year. "It was a nightmare," said Mr. Covey. "Nobody wants to give a 400-square-foot place. Everybody wants to hit a home run and show you a 3,000-square-foot place."

He eventually found a 700-square-foot space at First Avenue and East Sixth Street. The rent is less than $10,000 a month.

His tiny new oyster bar, called Upstate, began serving food last week, its 20-seat dining space packed the first night with customers and friends. Mr. Covey served the entire restaurant himself, stopping to chat about the difference between East Coast and West Coast oysters, while two cooks stood elbow-to-elbow in the kitchen.

Restaurants' appetite for space has shrunk dramatically since the recession, say real-estate brokers, as new owners look to avoid the huge rents that brought down their predecessors.

Danny Meyer's Tabla, a 283-seat restaurant in the Flatiron District, closed after 12 years, in part because of the challenge of filling it on weeknights, said the chef and partner, Floyd Cardoz. He's now preparing for the opening of North End Grill, another project with Mr. Meyer, that will have 100 fewer seats.

"They see the failure rate of larger restaurants that have very high overhead," said Dean Valentino, of ABS Partner Real Estate LLC, who was the broker for Mr. Covey's deal. "A lot of people in the restaurant business are looking for smaller, a little bit more intimate places."

Monthly rents for a typical 1,500- to 2,500-square-foot space in the East Village range from $15,000 to $30,000, according to Mr. Valentino. Owners can cut those costs in half with smaller spaces under 1,000 square feet that often rent for less than $10,000.

Those savings also get passed on to customers, many of whom have been looking to tighten their belts as well.

"They have reasonable price points, where you can have a variety and share with somebody," said Mr. Valentino "These are the types of places that people can go to more often."

But if having a dinner party in a studio apartment is a challenge, squeezing several-dozen customers, waiters and a professional kitchen into a space that size is even more so.

A new Asian-fusion gastro pub is under construction at 342 East Sixth St., with plans to open in the fall. One of the owners,
Tabitha Tan,
said her Melbourne, Australia-based architect was floored when she asked him to design an 800-square-foot restaurant.

"He told us this is going to be an impossible project," Ms. Tan said. "But for good food and good alcohol people in New York will cramp into a small space and wait for hours."

The new restaurant, Toucan & the Lion, will seat no more than 55 people. "For us as first-time business owners, it's a big leap of faith for us to say this is the space for us. This is our home for the next however many years," she said.

But it's not just the East Village—longtime home of tiny joints like Graffiti and Dirt Candy—where restaurants are seeking smaller homes.

The Terroir Wine Bar, which already has locations in TriBeCa and the East Village, is opening another in about a month in Murray Hill. And on the Upper West Side, two new restaurants will soon squeeze into 2,850 square feet at West End Avenue and West 61st Street.

Alan Philips
is part of the group that's undertaking the new projects, a group that also owns Friedman's Lunch in
Chelsea Market,
Community Food & Juice and the Yard in Trump Plaza. He says small restaurants aren't just a question of necessity, but also of customers' desire for more intimacy. "The consumer is looking for recognition from the operator of the restaurant. You have a manager or a partner running the restaurants, so they recognize the people when they walk in," he said.

One of the restaurants will be a bagel shop, catering to the morning and lunch crowds, while the other half will be an Italian pizzeria for families. Plans are to open by the end of the year.

Having two restaurants side- by-side also addresses some more mundane concerns: "We don't need two separate bathrooms, two separate exhaust fumes," he said.

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